I am Matt Olsen, the Assistant Attorney General for National Security at the Department of Justice. I am joined by my colleagues in the Justice Department: the U.S. Attorney for the District of Columbia, Matthew Graves, and FBI Assistant Director of the Counterintelligence Division, Suzanne Turner. We are also joined by Undersecretary of Treasury for Terrorism and Financial Intelligence, Brian Nelson, and Deputy U.S. Special Representative for North Korea, Jung Pak – who are both here to announce associated actions by their departments.
Today, in the culmination of a long-running investigation, the Justice Department is announcing a deferred prosecution agreement with British American Tobacco (BAT), one of the world’s largest producers of tobacco products, as well as a guilty plea by its subsidiary, BAT Marketing Singapore (BATMS). The agreement and the plea resolve charges for bank fraud and for violations of U.S. sanctions against North Korea.
Under the agreement, British American Tobacco will pay more than $629 million dollars in penalties.
This is the single largest North Korean sanctions penalty in the history of the Justice Department – and the latest warning to companies everywhere about the costs and consequences of violating U.S. sanctions.
Holding corporate wrongdoers who violate U.S. sanctions accountable is a priority for the Justice Department. U.S. sanctions are increasingly at the center of U.S. national security – at the Department of Justice we are responsible for putting teeth behind those sanctions.
The United States faces rising threats from authoritarian regimes, including North Korea, Russia, Iran and China. Sanctions and export controls are among the most powerful weapons in our arsenal – whether we are punishing North Korea for its rogue nuclear program, degrading Iran’s campaign of terrorism, responding to Russia’s illegal invasion of Ukraine, or countering the multi-faceted threats we face from the People’s Republic of China.
American and multi-national companies – especially those that do business in areas of the world on the front lines of our sanctions program – bear responsibility for preventing these hostile nation states from profiting from violations of U.S. law. Today’s announcement should make clear: corporations must invest in corporate compliance and in a leadership culture that takes responsibility for wrongdoing. And those who fail to do so will be held accountable.
The National Security Division is committed to pursuing and punishing companies that evade U.S. sanctions – and to imposing real consequences in cases such as this one. And the egregious conduct at issue here shows why.
British American Tobacco and its subsidiary engaged in an elaborate scheme to circumvent U.S. sanctions and sell tobacco products to North Korea through a corporate cut out in Singapore. This conduct was in clear violation of our bank fraud laws and the International Emergency Economic Powers Act – and this activity ultimately benefits the North Korean regime.
In 2007, British American Tobacco announced that it had ended all tobacco sales in North Korea as required by U.S. sanctions. In fact, the company continued to break the law by doing business in the DPRK using a third-party company under the control of its subsidiary. Between 2007 and 2017, this third-party company sold tobacco products to North Korea and received approximately $428 million dollars. This money was then funneled back to British American Tobacco.
As a result of these actions, the Singaporean subsidiary has pleaded guilty to conspiracy to commit bank fraud and conspiracy to violate U.S. sanctions. Its parent company, British American Tobacco is under a deferred prosecution agreement relating to the same charges.
At the same time, North Korean purchasers unlawfully made payments using front companies to hide the DPRK’s involvement from U.S. banks. Today we unsealed charges against three of them: North Korean banker, Sim Hyon-Sop and two Chinese nationals, Qin Guoming and Han Linlin.
The cornerstone of U.S. sanctions on North Korea is that the DPRK’s murderous repression at home and relentless pursuit of nuclear capabilities threaten not just to its own people but the entire international community. Allowing funds to illegally flow into the coffers of the DPRK is an unconscionable act.
As today’s announcement shows, the National Security Division is working closely with partner agencies in a whole-of-government approach to sanctions enforcement. We are committed to leveraging the full range of authorities and investigative resources to counter this threat.
I would like to thank U.S. Attorney Graves and the attorneys in his office and in the National Security Division for their work in achieving this historic settlement. Under Matt Graves’ leadership, the DC U.S. Attorney’s Office has been a trailblazer on sanctions enforcement and a stalwart partner for U.S. in this work.
I also want to recognize the strong partnerships with the Departments of Treasury, State, and Homeland Security, which have allowed U.S. to work in unison to uphold our sanctions and export control laws. Finally, I want to acknowledge the dedicated agents of the FBI and HSI who have been at the forefront of investigating this important case.